September 17, 1997
STATEMENT OF CHAIRMAN REED HUNDT ON NEED FOR LAW TO GUARANTEE
THAT FCC CAN RECLAIM AND REAUCTION SPECTRUM LICENSES FROM
LICENSEES WHO DEFAULT
I am pleased to report that all four Commissioners have today called on Congress to
adopt legislation that would prevent wireless licensees who default on their installment payments
from using bankruptcy litigation to refuse to relinquish their spectrum licenses for reauction. We
have sent a letter to Capitol Hill today that explains that this legislation is needed to avoid
delaying competition and new services, to ensure the collection of revenues, and to restore
certainty to the market.
I understand that the House of Representatives may begin consideration of the
Commerce, Justice, State and the Judiciary Appropriations measure as early as this week, and
hope that Congress will consider attaching our proposed legislation as an amendment to that bill.
A number of C-Block licensees have argued that, even if they default on their installment
payments, the Commission cannot take back and reauction spectrum licenses while bankruptcy
litigation is ongoing. This is a totally incorrect reading of the statutory scheme, but clarifying
legislation is needed to eliminate the risk that valuable spectrum licenses will get caught up in
litigation.
Along with the Administration, I sought this legislation in July. I thank my colleagues
for now joining me in emphasizing the importance of this legislation and the pressing need for its
adoption
I also thank Senator Dominici and others on Capitol Hill who have said they would try to
work with us on this legislation. I am confident that, as Members of Congress continue to study
this issue, they will agree with us that this clarifying legislation is needed. Congress never
intended to create another gold mine for lawyers or a convenient dodge for defaulters when it
asked the FCC to consider installment payments to encourage small businesses to compete in
spectrum auctions.
This legislation is part of the solution to the C-Block problem. The next step is for the
Commission to issue a Notice of Proposed Rulemaking that adopts the menu approach advocated
by Chairman Tauzin and Congressman Markey in the letter we received yesterday.
Adoption of that NPRM is no way obviates the need for the bankruptcy legislation. We
need that legislation to permit us to use installment payments in the future and to maintain the
credibility of installment payments that exist.
--FCC--